Article Summary
Redwood Bank has updated its commercial lending strategy to enhance the affordability of commercial mortgages for professional landlords and SMEs, particularly in the high-pressure interest rate environment of southern England. The bank has introduced a new five-year fixed-rate interest-only product and expanded fee options for its two-year and three-year fixed-rate mortgages. These changes aim to provide greater flexibility and leverage for businesses investing in their premises. Additionally, Redwood is incentivizing greener investments through its Green Cashback Reward for properties with high Energy Performance Certificate ratings.
What This Means for You
- Increased Affordability: SMEs and landlords can now access more flexible mortgage terms, including interest-only options, to ease financial pressure.
- Green Investment Incentives: Properties with A to C EPC ratings qualify for cashback rewards, encouraging sustainable investments.
- Broader Product Range: New five-year fixed-rate and alternative fee options provide tailored solutions for diverse financial needs.
- Future Outlook: Expect more lenders to follow suit with innovative products as the market adapts to higher interest rates and sustainability demands.
Redwood enhances affordability of commercial mortgages – Mortgage Strategy
Redwood Bank has re-assessed its commercial lending proposition to boost the affordability of its commercial mortgages for professional landlords and SMEs (owner occupiers).
These changes have been made following consultations with leading brokers and reflect the continued higher interest rate environment that has placed pressure on the leverage some firms can access to invest in their premises, especially in the south of England.
Redwood is also widening choice in its commercial mortgage range, launching a new five-year fixed rate interest-only product, which reverts to capital and interest for the remainder of the mortgage term.
It is also introducing its alternative fee option to its two-year and three-year fixed rate products for commercial mortgages. This provides the option to pay a higher arrangement fee in return for a lower interest rate to boost their leverage.
Commenting on the changes Redwood senior lending product manager, Tom Worbey said: “We are giving SMEs choice and simplicity with our latest changes. For example, we have simplified our interest-only options by removing LTV bands, meaning SMEs can now access an initial interest-only period between one and five years as part of their mortgage term.
He added: “In addition, landlords can benefit from our award-winning Green Cashback Reward, which is available on our commercial mortgages for properties with Energy Performance Certificate ratings of A to C. It is our way of providing landlords with a cash injection while contributing to a greener future.”
People Also Ask About
- What is Redwood Bank’s Green Cashback Reward? It’s a cash incentive for landlords with properties rated A to C on the Energy Performance Certificate.
- How does the new five-year fixed-rate product work? It offers an initial interest-only period, reverting to capital and interest payments afterward.
- Who benefits from Redwood’s updated commercial mortgages? SMEs and professional landlords, especially those in high-interest rate regions like southern England.
- What are the alternative fee options? Borrowers can pay a higher arrangement fee for a lower interest rate, improving affordability.
Expert Opinion
Redwood Bank’s strategic updates reflect a growing trend in the lending industry to address affordability challenges while promoting sustainability. By offering flexible mortgage terms and green incentives, Redwood is not only supporting SMEs and landlords but also positioning itself as a forward-thinking player in the commercial lending market. These changes could set a benchmark for other lenders in adapting to economic and environmental demands.
Key Terms
- commercial mortgage affordability
- interest-only commercial mortgages
- Green Cashback Reward for landlords
- SME commercial lending solutions
- Energy Performance Certificate incentives
- fixed-rate commercial mortgages
- alternative fee options for mortgages
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